Question: Indicate (by abbreviation) the type of hedge each activity described below would represent. Hedge . Type FV ... Fair value hedge CF ... Cash flow
Indicate (by abbreviation) the type of hedge each activity described below would represent.
Hedge . Type
FV ... Fair value hedge
CF ... Cash flow hedge
FC ... Foreign currency hedge
N ... Would not qualify as a hedge
Activity
_____1. An options contract to hedge possible future price changes of inventory.
_____2. A futures contract to hedge exposure to interest rate changes prior to replacing bank notes when they mature.
_____3. An interest rate swap to synthetically convert floating rate debt into fixed rate debt.
_____4. An interest rate swap to synthetically convert fixed rate debt into floating rate debt.
_____5. A futures contract to hedge possible future price changes of timber covered by a firm commitment to sell.
_____6. A futures contract to hedge possible future price changes of a forecasted sale of tin.
_____7. ExxonMobil's net investment in a Kuwait oil field.
_____8. An interest rate swap to synthetically convert floating rate interest on a stock investment into fixed rate interest.
_____9. An interest rate swap to synthetically convert fixed rate interest on a held-to-maturity debt investment into floating rate interest.
_____10. An interest rate swap to synthetically convert floating rate interest on a held-to-maturity debt investment into fixed rate interest.
_____11. An interest rate swap to synthetically convert fixed rate interest on a stock investment into floating rate interest.
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